MercoPress. South Atlantic News Agency

Oil price hits new record: 55 US dollars.

Oil prices surged to new record levels Thursday, breaking the 55 US dollars per barrel barrier.

Extreme cold weather in United States and Europe plus fires in three key US refineries triggered fears of gasoline shortage in the next northern hemisphere holiday season.

European benchmark Brent crude touched a nominal all time high of 53 US dollars pb in London while West Texas Intermediate broke through the 55 US dollars mark.

Apparently hawkish comments from Saudi Oil Minister Ali Naimi forecasting that oil prices will remain between 40 and 50 US dollars pb the rest of 2005, also had an impact.

Opec Secretary General Adnan Shihab-Eldin also helped when he stated that oil prices in the next two years could reach 80 US dollars pb if the event of a major oil supply disruption such as the war in Iraq.

Oil prices are roughly 45% higher that a year ago and have surged sharply in recent weeks. Booming demand from China and United States have contributed to the overall feeling supply and demand face a very tight balance.

Opec which supplies 40% of world production is scheduled to discuss oil production policy for the second quarter in two weeks time in Iran. Analysts believe the cartel is unlikely to increase production because it fears a fall in prices.

Nevertheless it wouldn't surprise the industry if Opec holds an extraordinary meeting, May or June to take action if the price continues to rise.